Report 2010-101 Recommendation 2 Responses

Report 2010-101: Department of Resources Recycling and Recovery: Deficiencies in Forecasting and Ineffective Management Have Hindered the Beverage Container Recycling Program (Release Date: June 2010)

Recommendation #2 To: Resources Recycling and Recovery, Department of

To improve management of its fraud investigations, the department should take the following actions: Formalize the approach used to analyze recycling data for potential fraud and develop criteria for staff to use when deciding whether to refer anomalies for investigation. Because DORIIS will be a central data source for recycling activities once it is implemented, the department should continue with its plan to automate the review of recycling data within DORIIS to identify potential fraud.

Annual Follow-Up Agency Response From October 2013

CalRecycle, Division of Recycling, Recycling Program Enforcement Branch (RPEB) currently produces, on a daily basis, a rules based Fraud Detection Report (FDR) for anomaly detection of disbursement transaction data. This report is automatically generated by the Division of Recycling Integrated Information System (DORiis). This report detects known indicators/ patterns of fraud using the primary reporting form recyclers used to report purchases and movement of CRV beverage containers. RPEB management uses the report to effectively assign investigative and inspection resources to potential high-value fraud targets identified on the FDR. The FDR identifies anomalous and/or suspect transactions before they are invoiced for CRV payment reimbursement. This provides RPEB the opportunity to place suspect transactions on hold, as needed, until the supporting documentation can be reviewed for accuracy and completeness by RPEB field investigators. The FDR generated from DORiis provides CalRecycle with the ability to mitigate CBCRF losses associated with fraudulent transactions on a pre-payment basis. CalRecycle has applied the above tools and processes and has documented this in a policy and procedures manual that was completed in December, 2012.

California State Auditor's Assessment of Annual Follow-Up Status: Fully Implemented

Annual Follow-Up Agency Response From September 2012

CalRecycle, Division of Recycling, Recycling Program Enforcement Branch (RPEB) currently produces, on a daily basis, a rules based Fraud Detection Report (FDR) for anomaly detection of disbursement transaction data. This report is automatically generated by the Division of Recycling Integrated Information System (DORiis). This report detects known indicators/ patterns of fraud using the primary reporting form recyclers used to report purchases and movement of CRV beverage containers. RPEB management uses the report to effectively assign investigative and inspection resources to potential high-value fraud targets identified on the FDR. The FDR identifies anomalous and/or suspect transactions before they are invoiced for CRV payment reimbursement. This provides RPEB the opportunity to place suspect transactions on hold, as needed, until the supporting documentation can be reviewed for accuracy and completeness by RPEB field investigators. The FDR generated from DORiis provides CalRecycle with the ability to mitigate CBCRF losses associated with fraudulent transactions on a pre-payment basis. CalRecycle has applied the above tools and processes and will document this in a policy and procedures manual that is expected to be complete in December, 2012.

California State Auditor's Assessment of Annual Follow-Up Status: Not Fully Implemented

All Recommendations in 2010-101

Agency responses received after June 2013 are posted verbatim.